2008.11.01

As per my usual voting routine, I spent some time tonight reading up on the Ohio ballot issues, so that I would be prepared to Vote monday or tuesday. Somewhat surprisingly, many of the issues are solidly related to financial matters.

There’s Issue 1 — This changes the pre-election deadline from 90 days to 125 days. This doesn’t relate much to finance.

Issue 2 — $400 million for environmental “stuff.” Opponents say that it’s money that we and our children will have to pay back. I love the “think of the children” argument, because it basically means the opponent is stupid and doesn’t have a valid reason for opposing it. In this case, $400 million divided amongst the 11.5 million people in Ohio (2006 estimate) winds up being a whopping $35. Holy cow, I can’t imagine the consequences of placing my children under such a heavy burden. Get off my lawn.

Issue 3 — Water conservation stuff. This is more of a property rights issue than a financial issue, so I won’t discuss it here.

Issue 5 — Limits payday lending interest rates to 28% from 391%, along with limits on the number of times a person can use the service per year. Opponents say that this is a death sentence for the payday lending industry, which is probably correct. This means that it’ll end some 6000 jobs in the state. At first glance, this might appear to be a bad thing, but really, it’s a good thing — that means that those 6000 people will have to find jobs that produce value. Currently, payday lending provides no value. Opponents have said “[if this bill passes,] Ohioans can no longer help themselves because the most common – and often only – method to help cover unplanned expenses has been eliminated.” The most common/only way to cover unplanned expenses? Are you serious? Have you heard of Savings accounts? Insurance? Emergency funds? Credit cards? All of these are perfectly legitimate solutions to unplanned expenses, and the most predatory of all of them, credit cards, rarely have interest rates above 30%. Further more, all of these are common. I know far more people with 2 or more of the aforementioned items than I do people who have relied on a payday advance service a single time (I acknowledge that using this single sample is a lousy statistic). Wait for my post on Slanting Reality with Statistics, when I get around to it 🙂

Issue 6 — The infamous gambling issue (complete with state-tax-free loopholes). Proponents claim that this will produce 5000 jobs (none of which produce wealth or value), and bring in $800 million, $240 million of which would be given to Ohio counties (in theory). What they fail to mention is that this industry will be financed by people who are likely to not have the money to afford gambling anyway, and that $800 “generated” will have to come from somewhere. At least a few studies have been done that demonstrate the social costs of gambling, and none have found any positive conclusions. Proponents claim that this will help the economy (because it creates jobs), but I don’t think that actually works out so well on paper or in practice. Interestingly, many elected officials are opposed to this bill, but Ohioans are largely in favor of it. I guess people really are that stupid (which is why we live in a representative democracy, instead of a a pure democracy.

I wholeheartedly agree with your comments about issue 5. Much of the demand for payday loans is artificial as a result of trapping borrowers in debt. In 1996, the payday lending industry got a free pass from the legislature to start charging 391% APR interest. 391% interest is no doubt predatory and unnecessary. I’ll be voting yes on issue 5 to lower interest rates to 28% APR!

Some ACTUAL COLD HARD FACTS —
“In truth, the typical payday advance customer represents the lion’s share of America’s middle class. A typical payday loan customer is a hard working, family raising adult who does not have savings or disposable income to use as a safety net when an unexpected expense occurs.

Sorry Casey, but you’re twisting the facts. (Casey works for Cash America, by the way)

On point 6) if 100% had steady incomes, why do we sometimes get calls for people in default from payday lenders? Seems like 100% is rounding a bit too aggressively.

On point 5) Irrelevant.

On point 4) Around 66% of all Americans are home owners, and this figure hasn’t been below 62% since the 1960’s. So apparently you’re fleecing people who are mostly not home owners (68% are not, according to your stat). Strangely enough, home owners, who have equity, have credit (though shaky in this economy), and thus have less frequent need of your “assistance.”

Point 3) Having a diploma or college experience does not imply maturity, or wise financial decision making. Finance was not taught as part of the high school curriculum in Central Ohio during the 80’s, or 90’s.

Point 2) I never asserted that senior citizens were in this group. By that time, most are retired, and can’t qualify for your “services”.

Point 1) Median income for the US was estimated at $50,233 in 2007. Thus, _all_ your clients are below average. Even after taxes, the estimates are around $45k, meaning that your distribution is skewed to the below-average segment of the population.

A typical, hard-working American adult has no reason not to have savings, or some form of credit. If they don’t, they are choosing to be irresponsible. That irresponsibility does not give you carte blanche to clean them out.

In getting my sociology degree, two of my most enlightening classes were social statistics class. For one of them, the professor’s whole aim was basically to show you what it REALLY takes to get a truly representative sample, and how NO ONE EVER really does that.

It is generally agreed by the Social science community that 1500 people is a minimum starting point for a decent study. However, you have to be intelligent enough to accurately analyze any confounding factors that could skew your result (which is unfortunately very subjective).

So for many polls, what you would truly have to do, is take a poll of 1500 people from every possible subset that could skew your result, and then stratify that result to be representative of the actual population you are trying to analyze. THIS NEVER HAPPENS EVER EVER. No one wants to truly do that because it is a massive task.

If you wanted to know how a given demographic might vote, you don’t just take a sample of 1500 people from that demographic. You have to break it down by subsets of that demographic (which would be a confounding factor), the region they are located in, socio-economic level, etcetera…. 1500 of each of those groups. Then, only through census reporting and other stats, can you manage to accurately extrapolate that to useable data.

Again THIS NEVER HAPPENS EVER.

What happens is that statisticians basically develop a shorthand/gut method for targeting whatever they are trying to target… and there is no real standard.

Why is it that when you hear opinion polls on the news, you rarely hear the sample number? On top of that, most exhibit horrible self selection bias… which in the hands of any organized group, can manage to skew poll data in all kinds of ways.

I’m not even digging into these posted stats between you and Casey… ugh it feels like a lifetime ago already (making my head hurt).